The California State Teachers’ Retirement System (CalSTRS) Investment Committee has increased the allocation target for private equity to 13 per cent from 12 per cent.
Other changes to the allocation targets for the fund’s $170bn portfolio included lowering the fixed income target to 16 per cent from 20 per cent, while the target for global equity was cut to 51 per cent from 53 per cent.
CalSTRS also increased the real estate allocation target by one per cent to 13 per cent, while the target for cash was left unchanged at one per cent.
In addition, CalSTRS said that while it set a long-term target of six per cent for the inflation sentivie asset class – compared with two per cent previously – it will not chase that target and has directed staff to instead allocate opportunistically.
CalSTRS Chief Investment Officer Christopher Ailman said, “Strategic asset allocation is the single most important factor in determining the overall rate of return for investments over the long term.
“By adopting this long-term asset mix, the committee reaffirms the plans we established after the financial crisis of 2008. To date, our performance–in the top 14th percentile over three years–demonstrates it’s been a good approach.”
Full plans for implementing the new asset allocation will be developed in the coming months and will take at least another three years to execute, CalSTRS said in a statement.
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